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OTC options are exotic options that trade in the over-the-counter market rather than on a formal exchange like exchange traded option contracts. Key Takeaways OTC options are exotic options that trade in the over-the-counter market rather than on a formal exchange like exchange traded option contracts.

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Unlike the standardized contracts that you can buy and sell on organized exchanges, OTC contracts are completely customizable. This presents some advantages, as you can effectively design your own contracts to fit in with your investment strategy. There are also some additional risks too though.

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Did you know that binary options can be traded on certain exchanges? Whether you hold a binary option contract that was issued directly to you i. So from a practical point of view, it might seem that there is little difference between OTC and exchange traded binary options. In fact, there are several key differences — not least when it comes to how the marketplace is set up.

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